Correlation Between Inverse Government and Natixis Oakmark

Can any of the company-specific risk be diversified away by investing in both Inverse Government and Natixis Oakmark at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Inverse Government and Natixis Oakmark into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inverse Government Long and Natixis Oakmark, you can compare the effects of market volatilities on Inverse Government and Natixis Oakmark and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Inverse Government with a short position of Natixis Oakmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Government and Natixis Oakmark.

Diversification Opportunities for Inverse Government and Natixis Oakmark

0.11

Correlation Coefficient

Inverse Government  Natixis Oakmark

Average diversification

The 3 months correlation between Inverse and Natixis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Natixis Oakmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Oakmark and Inverse Government is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Inverse Government Long are associated (or correlated) with Natixis Oakmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Oakmark has no effect on the direction of Inverse Government i.e., Inverse Government and Natixis Oakmark go up and down completely randomly.

Pair Corralation between Inverse Government and Natixis Oakmark

Assuming the 90 days horizon Inverse Government Long is expected to under-perform the Natixis Oakmark. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Government Long is 1.15 times less risky than Natixis Oakmark. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Natixis Oakmark is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,220  in Natixis Oakmark on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Natixis Oakmark or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Inverse Government Long  vs.  Natixis Oakmark

Inverse Government Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inverse Government Long has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inverse Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Natixis Oakmark

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natixis Oakmark are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Natixis Oakmark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inverse Government and Natixis Oakmark

The main advantage of trading using opposite Inverse Government and Natixis Oakmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government position performs unexpectedly, Natixis Oakmark can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Natixis Oakmark will offset losses from the drop in Natixis Oakmark's long position.

The idea behind Inverse Government Long and Natixis Oakmark pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.